UK house price growth slows as buyers ‘wait and see’ before Budget
House price growth in the UK fell on a monthly basis in October, according to new figures from the Nationwide Building Society.
Experts suggest that Budget uncertainty and a cooling job market have significantly reduced buyer confidence.
The lender said growth fell to 0.3 percent in October from 0.5 percent in September.
Property values rose by 2.4 per cent year on year, up slightly from September’s annual growth of 2.2 per cent, with the average house price in the UK reaching £272,226.
However, it was stated that the market across the country was “generally stable”.
In contrast, market analysts say buyers are adopting a “wait and see” approach ahead of the upcoming Budget.
This caution is being driven by speculation about potential property tax changes, as well as broader economic concerns and a weakening labor market; These are all identified as key factors hindering market activities.
Elliott Jordan-Doak, senior British economist at Pantheon Macroeconomics, said house prices remained low but were likely to continue to rise slowly in the coming months.
He said: “We think some homebuyers are taking a wait-and-see approach to the Budget, which is weighing down market sentiment a bit.”
He added: “But activity indicators are better than survey-based signals, telling us that demand remains strong.
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“We expect a pickup in activity once the budget is passed and buyers gain more certainty on policy.”
Bank of England lending figures released earlier this week showed approvals for home purchases rose to a nine-month high in September as borrowing costs continued to fall.
Robert Gardner, Nationwide’s chief economist, said: “The housing market has remained broadly stable in recent months, with house prices rising at a moderate pace and the number of mortgages approved for home purchases remaining at similar levels to pre-pandemic levels.
“In an environment where consumer confidence is weak and there are signs of weakening in the labor market, this performance demonstrates resilience, especially given that house prices are more than double the level before Covid and house prices are near all-time highs.”
He said conditions should help support the property market in the coming months.
Mr Gardner said: “If income growth continues to outpace house price growth as we expect, housing affordability is likely to improve modestly.
“If bank interest rates are reduced again in the coming quarters, borrowing costs are likely to soften a little more.”
The bank will announce its final decision on interest rates next week, and while most economists believe they will vote to stay at 4 percent, there are expectations of further cuts in light of recent better-than-expected inflation data.
Sarah Coles of Hargreaves Lansdown said: “There is a very good chance the market will continue to hold up through the difficult winter months.
“Alongside the fact that wages are rising faster than house prices, more than six months of falling mortgage rates will help persuade buyers to take the plunge, and better deals that have emerged in the last week or so will also help support the market.”
